How often have you heard someone in your industry say that they’ve considered automating parts of their inventory process, but they don’t trust a program to make the right call?
After all, human eyes will always be better than any demand planning software, right?
Human error is actually reported as a primary contributor to most accidents and disasters occurring across industries.
In other words, your next inventory-related disaster is far more likely to be caused by a human misreading a spreadsheet or miskeying a number than it is to be caused by a software malfunction. If you’re curious about the benefits of demand planning software but are unsure of where to start to experience those benefits for yourself, you’ve come to the right place.
This post will provide you with the top benefits of demand planning software. Then, we’ll walk you through a step-by-step guide showing you how to implement demand planning processes—and software—in your business.
Key Benefits of Demand Planning Software
Let’s begin by defining what demand planning software is. Demand planning software helps you forecast consumer demand and plan replenishment to always have the proper inventory in the right place to meet that demand.
Demand planning software is an essential tool every seller needs in their tech stack. The right demand planning software offers several crucial business benefits. Let’s explore four of the most important ones.
1. Stockout Prevention
Ensure you always have inventory available when someone wants to buy by predicting future demand and replenishing inventory before you run out. Stockouts cost retailers billions of dollars per year in lost revenue.
You work so hard to get users to land on your product pages. Don’t waste all the effort by having them find a disappointing “sold out” notification. Keep customers (and your accountant) happy by always keeping inventory available.
Demand planning software helps prevent stockout by predicting exactly how much inventory you will need on hand and when you place your order to ensure optimal inventory levels. The best demand planning tools consider complex factors like seasonality, past sales performance, past and current pricing, sales trends, and prior stockout to forecast future demand reliably.
2. Storage Reduction
You can also use demand planning software to reduce your storage and associated costs. You can accomplish this by reducing your overstock, deadstock, and working capital by only ordering the units you need when you need them.
The importance of reducing storage is fairly obvious: The less inventory and warehouse space you need to pay for, the more money your business can save on overhead costs and unneeded inventory and invest in other areas of the business.
Demand planning software can make this possible by reducing the amount of safety stock you need to order. Instead of keeping a massive buffer to avoid stockouts, accurate demand planning software can help you order exactly what you need when you need it.
3. Supply Chain Optimization
Optimizing your supply chain gives your business an edge in the marketplace. Demand planning software can help you gain visibility into inventory and sales across multiple channels in a single dashboard.
Simply increasing your visibility into the inner workings of your supply chain can help you better prepare for unforeseen challenges and supply chain delays. You can also reduce the amount of time you and your team spend managing inventory and supply chain processes when your supply chain is optimized.
Armed with this critical information about your supply chain’s operations, you’ll be able to optimize your replenishment, place POs, and manipulate forecasting for multiple scenarios. These processes will help you to perform demand planning tasks with more accuracy, getting you the product you need at the right time in the right location.
4. Real-Time Adjustments
Not every demand planning software lets you make changes on the fly, but truly incredible options, like Flieber, offer this capability. With real-time adjustments, you can see upcoming challenges and view recommendations, giving you the opportunity to take action before a challenge becomes an inventory disaster.
For example, if sales have skyrocketed for a specific product out of the blue, you may receive a recommendation to switch your next overseas shipment to an air delivery rather than a delivery by ship to avoid stockout.
Even the most optimized supply chain will run into issues every once in a while. With the ability to adjust delivery schedules as needed, you can avoid stockouts even when everything goes wrong at the same time.
Demand planning software that allows for this capability is truthfully more than just demand planning software—it’s like an extra employee in your operations department, putting out fires when needed.
How to Implement a Demand Planning Software Solution
To enjoy these benefits, you’ll need to invest in the right software solution and take the proper steps to set up internal processes to use it to maximum impact. Let’s examine the five steps of a successful demand planning software implementation.
Step 1: Build Your Stellar Implementation Team
Any software implementation requires you to build a team. This team should consist of key players both inside and outside your organization. Internally, you will want to involve representatives from finance and sales in addition to the staff who will be working with the demand planning software most frequently.
Create a communication plan and ensure that each implementation team member has a clear role and knows where that role fits into the larger picture of the implementation as a whole. Identify existing processes, sales channels, fulfillment centers, and intermediary warehouses used.
Your next step here is to identify key contacts throughout your supply chain and the point of contact dedicated to your success with your software provider.
Working with Flieber, you’ll have a four-step implementation process, which takes one to three days to complete:
- Meet your dedicated Customer Success Manager and align on your process and goals.
- Connect your sales channels and integrate with supply chain operations.
- Forecast accurately, accounting for previous stockouts, seasonality, outliers, and other variables.
- Restock and adjust sales based on real-time sales data and supply chain operations.
Step 2: Identify Valuable Key Data
For your software implementation to go smoothly, you need to begin with critical data related to your inventory processes and practices.
Some of the data you need to ensure you’re identifying and bringing to the table early on in your software implementation include:
- Sales data
- Stockout rates
- Inventory turnover
- Minimum order quantity (MOQ)
- Lead time
- Obsolete inventory
- Timing of pricing changes, promotions, etc.
- Seasonality of certain products
When you implement Flieber, you’ll connect our software directly to your sales channels, meaning you’re able to populate all of this data in a single, easy-to-read dashboard.
A deep understanding of your internal data is vital to the success of your demand planning efforts. However, you cannot forget to include various external data points in your considerations. Some external data you should consider are the delivery timelines of your suppliers and the overall economic conditions in your area and industry.
Step 3: Establish Successful Forecasting Models
With your team selected and your data identified, your next step is to choose the best forecasting model for your business. Advanced demand planning software solutions will allow you to choose from multiple models.
For example, Flieber has multiple models and selects the best one to apply to each customer every week. You can also choose to manipulate your forecasting model manually to see how the forecast differs depending on your model.
It’s important not to take your initial forecast at face value. Once you have your first forecast in hand, reanalyze your data and take this opportunity to refine your methods to provide your business with the best forecast possible.
During this optimization process, you will want to work with your finance team to align your forecast with the company’s overall financial forecast. Additionally, take steps to identify potential outliers that distort your forecast data. If you’re using Flieber, our software will automatically accommodate for outliers.
Step 4: Get Accurate Data on “Safety Stock” Needed
Safety stock is the extra product you keep on hand to reduce your stockout risk. The trick with safety stock is determining the exact number of additional units to stock so you have enough product to accommodate unexpected demand, but not so much product that it’s a drain on resources due to overstock or deadstock.
The first method is to calculate the amount of inventory you need to fulfill the demand you have forecasted. Flieber does this for you, but this isn’t true for all demand planning software solutions.
You’ll also want to work with vendors to ensure you’ll be able to have that stock in the right place by the time it’s needed. Consider the transportation volume needed—can your vendors transport the volume you need?
The answers to these questions will be critical in establishing and maintaining safety stock levels.
Step 5: Make Results-Based Optimizations
The last step of your demand planning software implementation is an ongoing one: Continuous optimization. Once your forecasting software is in place, examine your performance and measure the effectiveness of your demand planning efforts against KPIs relevant to your business goals.
The KPIs you select will depend on your industry, your business, and your current goals. However, some common KPIs related to demand planning include:
- Forecast accuracy
- Order fulfillment lead times
- Inventory turns
Implementing the Best Demand Planning Software For Your Business
Demand planning processes are vital to the successful inventory management of your business. Your business can face stockouts, inefficient warehouse usage, poor customer service, shipping delays, and more without demand planning capabilities. Inventory forecasting can feel overwhelming, but it doesn't have to be when you have the right demand planning software.
We have seen firsthand the benefits people receive from implementing robust demand planning software. Flieber’s solution is built to help you keep your finger on the pulse of demand forecasting for your business by removing all the manual, time-consuming, and error-prone processes used for forecasting, inventory planning, and replenishment.
To see how Flieber’s demand planning software solution can improve your business processes, schedule a demo today!